Lawful Thoughts®

FOCUSED ON LEGAL ISSUES AFFECTING BUSINESSES OF ALL SHAPES AND SIZES

A borrower or personal guarantor who has been discharged in a bankruptcy case sometimes wants to extend a loan or to receive forbearance from the bank. Otherwise, for example, the debtor might face losing property to foreclosure. The bank might also prefer to extend or forbear on the loan. This scenario puts the bank at risk of violating the debtor's bankruptcy discharge, which can have serious consequences.

On May 15, 2017, the US Supreme Court ruled that a debt collector does not violate the federal FDCPA by filing a proof of claim in a bankruptcy case where the underlying debt is time-barred by the applicable statute of limitations.

The Liquidating Trustee of Health Diagnostic Laboratory, Inc. and its affiliated debtors in bankruptcy is attempting to recover certain payments that HDL made in the years leading up to HDL’s bankruptcy filing on June 7, 2015, including certain payments to charities.

This month we report on two very recent court decisions that are noteworthy for creditors. In the first decision, the U.S. Supreme Court defined “actual fraud” in a way that allows a creditor’s claim against the recipient of a fraudulent transfer to be declared nondischargeable in bankruptcy. In the second decision, the federal Fourth Circuit Court of Appeals clarified that a Chapter 13 debtor’s right to “cure” his mortgage default doesn’t mean that he gets to reinstate a pre-default interest rate.

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The Spotts Fain Lawful Thoughts® blog focuses on the current legal issues affecting businesses of all shapes and sizes. From labor and employment and construction, to intellectual property and beyond, Lawful Thoughts® provides businesses with easy to read, practical thoughts on the current legal trends and topics facing businesses today.

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